Dear Lawyers: If a Client You’ve Never Met Sends You $350,000, It’s Probably a Scam

Here is the story of what happened when I answered a shady email solicitation aimed specifically at lawyers. It resulted in a six-figure check appearing magically in my mail without any real work on my part. Of course it was a scam—and one that attorneys need to watch out for—because these types of fraudulent solicitations are all too common. They promise an easy task and a huge payout, but there is really no such thing.

Now, I usually don’t answer solicitation emails from strangers living in foreign countries for a number of reasons. First, there are language and cultural barriers that can lead to misunderstandings and prevent effective representation. Also, some of their issues involve laws in their home countries that are beyond my expertise. But most of the time, I don’t answer them because the solicitations are fraudulent. They generally lure unsuspecting lawyers into advancing large sums of money (usually from their client trust accounts) by promising them a very large fee. And over the years, their techniques have become more sophisticated.

Despite knowing this, I decided to answer one particular email solicitation. The potential client, supposedly located in an Asian country, needed assistance with filing an L1 visa for one of its executives who needed to work in the United States. I replied and asked for additional documents about the company and the executive employee. I also asked for the potential client’s Skype information and requested my consultation fee be paid in advance using either wire transfer or a credit card. Instead, the potential client asked for a copy of an attorney-client contract after I performed a conflict check.

I used the internet to look up the name of the company and the transferring employee. The company was a legitimate overseas business. I was unable to find any information on the employee, but this is not unusual as most employees in that situation tend to minimize their internet exposure.

Things got interesting when I looked up the name of the potential client. He had a Linkedin profile that claimed that he worked for the company I had located. However, he only had four connections, none of whom were connected to the company. That was unusual but not a dealbreaker. Many people neither maintain nor update their Linkedin profiles unless they are looking for a job. Other websites associated him with the company, but it was possible that the potential client set those up himself. It was then I noticed that the potential client was using a Gmail account to communicate with me, which was an unlikely thing for a corporate client to do.

All of this, in addition to my cynical nature, made it easy for me to decide not to work with the potential client. Things just weren’t adding up. I thought about referring him to some immigration attorneys I know, but those people respect me, and such a referral might jeopardize that. So I sent the potential client an email telling him that I was not interested in working with him.

I thought that would be the end of the matter. Instead, the potential client replied asking again for a copy of my retainer agreement, which he said the company had already authorized him to sign. He also mentioned that I would receive $350,000 from one of their customers from an unpaid invoice, and I would be able to deduct my fee from the proceeds.

As you are no doubt aware, clients typically do not pay this way. There is no reason someone would give that kind of money to someone they do not know, even if he or she is an attorney. This was when I shifted from wariness to the full-fledged realization that this was a scam. I decided just to ignore him.

A few days later, I received a check for $350,000 in the mail.

First, I took a look at the envelope. The sender is apparently a business in California, so it was very suspicious that they used non-U.S. postage to send mail to my office.

Second, I looked at the check itself.

I must admit, while it was hard to ignore my name attached to the receiving end of a $350,000 check, I immediately noticed that it came from the Bank of Nova Scotia. A quick internet search did not show that this business had a presence in Nova Scotia.

I could have reported this to the authorities, but I doubt it would have done much. Or I could have requested a wire transfer or a money order instead, but it is likely that it would lead to even more excuses or a fake check for $3 million.

Had I cashed it, it is probable that one of two things would have happened. The check could immediately be returned for insufficient funds, at which point either the sender would make an excuse or possibly accuse me of stealing money and try to blackmail me. Or the check would be placed on hold by the bank and in the meantime, either the sender or the potential client would ask that I repay them immediately before the check clears. Assuming I had a spare $350,000, that money would be transferred and likely never to be seen again after the check bounced. Worst of all, I could have transferred existing money in my trust account, which can result in ethics violations.

This scheme is not new. Con artists have repeatedly targeted collection attorneys. A potential client from overseas claims to have secured a six-figure judgment in the United States and needs an attorney to collect on it. Not long after the attorney agrees to take the case, he miraculously receives a cashier’s check from the debtor made payable to the attorney for that amount. (Those checks are often drawn on banks in Nova Scotia.) The attorney deposits it into their client trust account and alerts the client. The client then sends an email requesting that the funds be wire transferred immediately due to a financial emergency.

So how does one avoid falling for these schemes? The first and most obvious rule is not to respond to these solicitations altogether. If you ignore that rule, as I did, make sure that their documents match their stories. Also, don’t be afraid to ask the tough questions. Finally, and most importantly, do not send any money until all checks clear. Don’t be afraid to wait for an extended period.

So I lost $350,000 as quickly as I received it. But I’m keeping the check as a reminder that if something sounds too good to be true, then it definitely is.

Steven Chung is a tax attorney in Los Angeles specializing in federal and state tax planning and tax dispute resolution. He is currently the Secretary of the Beverly Hills Bar Association Section of Taxation. He received his LL.M. in Taxation with honors and high distinction from Loyola Law School and was a national finalist in the ABA Law Student Tax Challenge. His writings have been published in Forbes and the Virginia Tax Review. His policy recommendations on the taxation of digital currencies have been cited in the IRS Taxpayer Advocate's Annual Report.

Great article Steven! Both attorneys and staff need to be educated on these kinds of issues. We get at least a call or two per month that is likely a scam.

David Bjornson

He really is a wise man. If there is something suspicious going on, don’t bother responding as it might be a scheme that might lead you to be in trouble. Be wise like Steven Chung!

Paul Spitz

Hah, I’ve got two of these checks in my desk drawer, because I like to toy with these scammers. Both are drawn on Canadian banks (actually, both are really clever forgeries), which is a characteristic of these scams. International checks may take a month or more before they really, truly clear, which is essential to the scam. Your bank will tell you the funds are available after maybe 8 days, but that isn’t really the same thing.

Your first red flag is ALWAYS the email address. Rather than using an official company email account, these people always use a free gmail or yahoo email. A second red flag is that the email account used may change from the first contact to the second or third contact. A third red flag is that they are contacting you, out of the blue, by email (no offense). Why would this supposed multi-national Japanese (or Chinese, or British) firm be picking me, a solo attorney, without any references or other connections?

I’ve seen these scams provide pretty decent looking transactional documents, such as business contracts – when they contact me, it’s usually to facilitate the sale of some kind of construction or dredging equipment. I think an actual lawyer from either Texas or Florida was arrested in connection with these frauds, sometime in the past year or two.

Michael

i think if an attorney falls for this, they should probably re-think practicing law…its so obvious…i once had a lawyer friend of mine that told me some one from africa wanted her personal information to send her a bulldog puppy and she was wondering if she should do it. I told her there are no bull dog breeders in africa…its too hot!

Andrew Anderson

As a Canadian the major flag this is a forgery is that the bank branch address in Whitehorse, Yukon (a small town near the border with Alaska) … geography to the rescue!

PS: The Bank of Nova Scotia (commonly know as Scotiabank) is the third largest bank in Canada and has very little connection to Nova Scotia